1.

Introduction

Digital information data is used increasingly nowadays. Digital data that continually used
in large numbers raises a new type called big data. Research and advisory company
Gartner defines big data as "High volume, high-velocity and/or high-variety information
assets that demand cost effective, innovative forms of information processing that enable
enhanced insight, decision-making and process automation”.1 This complex collection of
data sets cannot be analyzed by traditional databases or tools, such as spreadsheets. Big
data is widely used for companies' decision making by gathering large amounts of
information received from various sources that are analyzed and processed according to
data values.

There are several characteristics of big data, including:

a. Volume

The size of data collected by companies is enormous or may be unlimited. Millions of

data cross the internet every single time. That makes a company have to work with a lot
of data to reach petabytes in a certain period time. Like Walmart, which is estimated to
collect more than 2.5 petabytes of data every hour from transactions made by customers.2
From that example, it can be said that data information from a large company will
continue to grow massively in an indefinite time.

b. Velocity

The definition of velocity is the speed of data that is very quickly obtained. The data
processing speed received makes the company must be ready to use the data. Data
received must also be entered at the right time to be able to make good business
decisions. For example, a food provider company needs to know the number of guests
who will come to an event to prepare the number of servings food to be provided. Data
about the number of guests will not be useful if the data is obtained after the event starts.
Therefore, companies need real-time information to be able to compete with competitors.

1
Zabihollah Rezaee and Jim Wang, “Big Data Big Impact on Accounting”,
http://app1.hkicpa.org.hk/APLUS/2017/10/pdf/42,43,45_large%20source.pdf, Page 1.
2
Andrew McAfee and Erik Brynjolfsson, “Big Data: The Managament Revolution”, Harvard Bussiness
Review, October 2012, Page 4.
 c. Variety

The types of data collected by a company are very diverse. The more data is collected,
the more variety of information obtained, both structured and unstructured. Data that has
not been structured such as text, audio, images, and others needs to be reprocessed to
find out the concrete results of these data. Variety of data depends on the nature of a
company's business. For example, mass-market service-based companies must pay more
attention to data from social networks compared to industrial business companies.

d. Veracity

Veracity is talk about how accurate a very massive data which is received by the
company. The quality of the data that is obtained becomes something calculated whether
the data is true or can not be trusted. According to IBM Big Data and Analytics, one in
three business leaders don't trust the information they use to make decisions.

e. Value

Every data always has a value but the data cannot be used until the value is found. The
value of a data can determine the decisions that can be taken by a company after
processing all existing data. Utilizing the right data value can make a business run more
efficiently.

Picture: The Four V’s of Big Data3

3
IBM Big Data and Analytics HUB, “The Four V’s of Big Data”,
https://www.ibmbigdatahub.com/infographic/four-vs-big-data
Data collected usually consists of several types:

a. Company Data: Product sales, operation metrics, marketing activities, and financial
performance
b. Consumer Data: Ethnicity, gender, purchases, online behavior, etc.
c. Sensor Data: Internet of Things (IoT) such as tracking people or things
d. Syndicated Data: Data acquired from vendors, such as survey data

Big data is collected from various sources of information and different locations that
must be sorted, linked or combined, formatted, verified and secured before it can be
analyzed. Structured data can be collected or stored in a number of ways:

a. Categorical: Data that is in categories such as regions, anything yes or no,

b. Ordinal: Data that can be ranked, such as excellent, good, average, so on.
c. Interval Data: Along the lines of the ordinal data but the distance between data is
meaningful, such as test scores, temperature, etc.
d. Ratio Data: Data such as time, height and weight.

Big Data in Accounting

Big data impacts nearly every aspect of accounting. The big data analysis can create
opportunities for accountants and auditors to sharpen their skills in processing data. Big
data can be a great opportunity for the business community and professional accountants
to increase effectiveness and efficiency at work. In advisory service, big data can help
identify questions, monitor and improve business performance, and can create analytical
models to improve products or operations.

There are general matters related to big data with financial and management accounting.
The big data analytics can help to solve issues between users and preparers of financial
reporting and accounting. In financial accounting, a variety of different data sources must
be integrated into the accounting information system. For example, unstructured data
such as text, video and audio must be connected with traditional data to be reprocessed
for financial reports. Accountants are also expected to improve their ability to analyze
large data including automated data such as customer purchases, URL click-through
tracking, and content engagement data.
Big data in management accounting has the potential to improve performance
management systems better. For example, finance and accounting teams in a
manufacturing firm can acquire benchmark metrics from the financial automation
services provider and compare whether or not the firm's performance is below the mean.
The benchmark metrics report can make a company monitor employee telephone track
records, e-mail, use of the web and clickstream so that the data report can better control
the company's performance.

In addition, big data is also able to identify variables that were not previously considered,
for example, companies can measure employee morale based on email tones and
telephone conversations made with company equipment, productivity based on the
number of emails sent by managers, and customer satisfaction based on body language
seen from customer.

Big data also affects the auditing process. Auditors can use big data to reduce audit costs
and increase profitability. Big data allows auditors to analyze structured and unstructured
data to minimize the potential for transactional errors and minimize the increase in fraud
transactions. For example, Confirmation.com, a company providing automated audit
confirmation services which houses more than 14,000 accounting firms, 100,000 auditors,
and 700 organizations, provides services by providing an all-in-one solution to minimize
fraud and increase efficiency for the entire audit confirmation process. However, the use
of automatic data collection services and analytical techniques to identify errors, allows
the auditor to shift responsibility from detecting errors in the data to assessing which
errors can be further investigated.

Big data has potential to significantly change accounting standards. Traditional

accounting standards are considered unable to adjust due to high transmission costs and
slow data collection speeds. Accounting standards must focus more on the data than how
to present it to be more relevant. With the big data analysis, accounting standards will
give users more responsibility for using existing data.

There is a reseach about how data-driven can improve business performance better. From
the results of research on 300 North American companies regarding organizational
management practices and technology, not all companies make data-based decisions for
annual reports. But the facts obtained from the results of the analysis found that the more
data-driven based companies, the better these companies in measuring their financial and
 operational results. Companies in the top third of their industry in the use of data-driven
decision making were, on average, 5% more productive and 6% more profitable than their
competitors.4

Big data also becomes a new culture in decision making. The huge amount of data is a
challenge and has its own impact on how a decision is made and who has the right to
make a decision. When data is scarce, expensive to obtain or not available in digital form,
it is natural to place good people in making decisions or those who have more experience.

Accountants and finance professionals have an active role in filtering out large amounts
of information that will be followed up by the big data collected. Besides, professional
accountants also play a role as maintaining non-financial data sets and setting quality and
ethical standards of information for making strategic decisions. Many companies
increasingly need the role of accountants in processing data that companies have to be
developed into new products or services. Accountants and finance professionals need to
do three things to turn big data to be their advantage:

1. Develop methods and services for data and increase their role in internal control so the
data processing is more effective and efficient,

2. Using big data to make decisions and determine which data is useful to share with
internal and external stakeholders,

3. The use of big data not only for risk protection but also for the long-term benefits of
investing in new products and new markets.

4
Andrew McAfee and Erik Brynjolfsson, “Big Data: The Managament Revolution”, Harvard Bussiness
Review, October 2012, Page 6.
Reference

Hannan, Adina. (2016, 23 August). Big Data Meets Accounting. Retrieved from
https://www.beckerpinnacle.com/accounting-and-finance/continuing-
professional-education/big-data-meets-accounting/2016
IBM Big Data and Analytics HUB. The Four V’s of Big Data.
https://www.ibmbigdatahub.com/infographic/four-vs-big-data
McAfee, Andrew and Erik Brynjolfsson. (2012). Big Data: The Managament
Revolution. Harvard Bussiness Review.
Rezaee, Zabihollah and Jim Wang. Big Data Big Impact on Accounting.
http://app1.hkicpa.org.hk/APLUS/2017/10/pdf/42,43,45_large%20source.pdf.
The Association of Chartered Certified Accountants. (2013). Big Data: Its Power and
Perils. https://www.accaglobal.com/bigdata